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The Bimal Jalan Chat

Why don't you log in and find out what he said?

s (Thu Aug 29 19:48:01 1996 IST):

hello

Mr Jalan, are you there?

Hello Dalal Street

Hullo Prashant, where is Mr Jalan?

Dalal Street: Hi I think Mr Jalan is on his way.

Mr jalan, welcome to the Rediff Chat. It is a pleasure to have you with us this evening.

Dr. Jalan: This is the end of long working day in Delhi, while for many of you it is the begining of a nice day I hope. Welcome to this program, and I very much look forward to talking to you through this medium.

Rajiv Kapur from Atlas Cycles has sent in thse two questions: How do you see Indian industries in 2000?

He also wants to know whether public sector units should be privatised?

You seem to have an optimistic view of the Indian economy, if what one read as a prologue to this Chat is any indication. On what basis, Sir, do you base your optimism? Do you think India could be a major economic power in the next century?

Mr Jalan, there appears to be too much empahsis on industry. What about agriculture? can India ever be an economic power if food supply does not keep up with the exploding population

Mr Jalan: Hi. I'm a student at the University of Maryland at College Park, USA. Here is what I suggest:

As in America the identity of the individual is solely determined by a number given to him i.e the social security number. Why can't we have such a system? , so that all the bank

which is India's weakest link in industry

Rajiv Kapur:I can tell you what I would like to see Indian Industries doing in the year 2000. I cannot be sure whether this will actually happen, but the potential is there. My hope is that in the year 2000 the Indian brand money on many products of common consumption as well as on sophisticated products like computer software, woould become household words. Indian Industry should become globalised by then, and make its mark in the world markets both for quality and price. As for your second question i.e., privatisation, for the reasons that I have explained in greater details in my recent book at the present time there is simply no alternative but to reduce substantially assets in the public sector in order to reduce the burden of interest payments on public debt. Part of this debt was incurred to create the assets which are not paying any returns. It is only logical that these assets should be reduced.

All's well with the world...

To Prashant: It is obviously a good idea to have some kind of an I.D No. which can be used for multiple purposes. However, the problem in India is that we have a very high level of illiteracy. Nearly half of the population is illiterate which would find it difficult to handle documentation . Our first priority has to be to eliminate illiteracy. Meanwhile, of course, in urban areas and other areas where litteracy levels are high we should indeed introduce an I.D. No.

Hi Mr Jalan

Do you agree with the tenor of the reforms? Do you think the reforms are long overdue? You, I believe, Sir, were finance secretary. Was it a lack of political will that prevented the reforms being initiated during your tenure?

:)

Hi Mr Jalan

Hello Mr Jalan

Mr Jalan, what are India's strength and weakness to become a world economic power

is Mr. Jalan here?

.

To akash: I agree with you that agriculture development is of utmost importance in a country like India where nearly two-thirds of the people are dependent on it. The primary reason why we have to emphasise industry is because increase in incomes in agricultural areas is not feasible without reducing the number of people dependent on agriculture. We have to create more jobs in industry.

Mr Jalan, you've worked with the World Bank, what are the lessons India has to learn from Mexico?

how long will it take for india to come up to the standards of south korea Mr. Jalan; in number of years?

Mr Jalan, the industries of the future are in communications, biotechnology, robotics. Where will India stand in this?

Are you not being a trifle overoptimistic, Mr Jalan, in hinking that the Indian economy will be a major power in the next century. When you have not eliminated poverty, how can you ever be a major power? I think India will go the way of the Latin American countries, with a lot of crime as a consequence of economic disparity.

To akash: Yes, I have an optimistic view. I believe that we are today better placed in terms of skills and industrial base than was the case in East Asia 25 years ago. Major changes in technology and communications have also put us in an advantageous position as nearness to industrial markets is no longer an important condition for economic success. There are other reasons too for my optimism which I have explained at greater length in my recent book.

Mr Jalan: I understand that this is not feasible for it to go into the interiors, but at the same time , if all service class, registered property holders, all people who have bank accounts, anmd all people having registered business, all ration card holders, Along with their families would be made to have such a number. I think it would cover a chunk of people wherein black money is being laundered at such a large scale and also among whom bribing is rampant.

where is Mr. Jalan....I can't see him....What the hell...so archana, where are you from? how old?

akash --- male or female?

Don't you think centralised planning has been one of the main causes for the Indian economy being where it is. Can India justify having a Planning Commission now? And what will it now do? Will it play a secondary role to the mandarins at the finance ministry?

Will not reducing the numbers dependent on agriculture push up prices of food cereals, which in turn will severely affect the poor? how can this adjustment period be overcome?

To Alexander: Perhaps, I am over optimistic given the past performance. However, my main point is that the World has changed in the last 15-20 years in favour of developing countries because of changes in technology and communications and that India is now in a position to take advantage of these changes to substantially accelerate its growth rate. If growth rate is increased to 7-8% per annum, which is feasible, poverty will be eliminated in the next 20-25 years.

Do you believe that the Indian economy can ever be on par with the Chinese economy?

this is ridiculous...Mr. Jalan, please don't reply to Kandy; I'm trying to talk to archana and this fellow keeps butting in.

sandeep, pls talk with bimal jalan and forget gender

To Archana: The main lesson to learn from Mexico is that a high level of current account deficit, of the order of 7-8% of GDP as was the case in Mexico, is not sustainable. It is important not to rely on debt financing over a long period of time to cover large deficits. Much better to increase exports and reduce the trade deficits. There are other lessons, but this in my view is the most important one.

Your predecessor at the Planning Commission, Dr Arjun Sengupta, was very critical of the reform process. There was a visible clash between the finance ministry and the planning commission. If the finance ministry ignores the PC's prognosis and warnings, what can the PC hope to do?

Mr Jalan,many are of the view that five years down the road of economic reforms India has achieved very less.What do you think is lacking in the reform process?

To Akash: No, in fact productivity in Agriculture is likely to improve if there were less pressure of population dependent on it. In most countries which have shown high rates of growth in agriculture, increase in productivity and incomes has gone hand in hand with a reduction in number of farm workers.

Can the Indian finance minister ever hope to cut the deficit? Do Indian finance ministers have the courage and the political will to cut government spending and the deficit?

Mr Jalan: Can a rule be made that all government employees be allowed to invest only in government securities or other fixed deposits and also land with proper registered eveidence. With this I believe, people will have more faith in democracy.

As Finance secretary, how could you have avoided spotting the looming debt crisis. Are you not partly responsible for what happened in 1991?

Have you seen this year's Budget? As a government appointee, you may not like to comment on whether it is good or bad. Hence, this hypothetical question: If Mr Chidambaram were to ask you for your advice on how to tone up the Indian economy, what advice would you give him?

Talking of agriculture, the problem is that the ones who can be moved out are the poor and marginal farmers, and yet they are absolutely unskilled to be productive anywhere else, and moving them out is a major human trauma? so how can this paradigm shift be achieved of reducing pressure on agriculture with a "human face"?

To Kandy: I believe in open dialogue, and not in confrontation or conflict among different departments of the Government. I hope that both the Commission and Finance Ministry can develop a common approach in strategy in order to accelerate our growth rates. There may be some differences in perception but I am confident that we can work together. In any case no one has a monopoly of wisdom or of always being right. Finance Ministry has to listen to us, no doubt but we also have to be open minded.

Mr Jalan, you mentioned earlier about catching up with East and Southeast Asia. But none, repeat none, of them were democratic countries like India. Can a democracy with its lobbies (esp the kulaks who pay no taxes and get free electricity) ever then achieve such a growth rate?

Mr Jalan: If the output of farmers and their channel to the consumer was to be taken under governmental and other vigilant control, don't you think, that we shall be able to impose at least 1% tax on the farmers and thus bring a uplift in government revenue?

Good evening, Dr Jalan. I hope you are well. We in the West are often dismayed by the fluctuating and conflicting responses to liberalisation. Don't you think it is a drag on India's economy?

To Akash: You have forgotten about Japan. Malaysia too. Most of the East Asian economies in recent years have done well within a democratic framework. Reasearch has also showed that there is no reason why democracies cannot grow at a fast rate.

In a liberalised economy, do we really need a planning commission? Moreover, over the years the PC worked as a sort of superstatutory body overriding the Financial Commission, which incidentally has Constitutional sanction (the PC does not)? How fair was this? And shy a PC today?

Dr Jalan, how could we have landed in the mess that we did in 1991 if it were not for the finance ministry ignoring the warning signals? Did the finance ministry spot it? And was the finance ministry's advice ignored by the politicians? Please shed some light on what really happened those years you were FinSec?

Don't you think the reforms would ever have come about if it wre not for India being bankrupt in 1991?

To Conrad Pius: You are right that there are conflicting views on liberalisation in certain areas. Hopefully, a consensus will emerge after dialogue and in the light of what actually happens in the Indian economy. My impression is that, in view of the strong growth and low inflation in the recent period, the constituency for liberalisation is growing.

Mr Jalan, with due respect to your answer on Japan, it had America's full backing, which became even more during the Korean War (when it became necessary for US to support a democratic Japan against a communist China/N Korea/Soviet Union. And no doubt Malaysia did succeed, but it is smaller and had it also benefitted from US aid due to the paranoia of communism takeover in Southeast Asia (Vietnam syndroem). India has had no such backing and is also too large and diverse? So despite all this, can I have a reason to be optimistic?

You have served in the World Bank through the years of the reforms.There was an impression in India that the World Bank was dictating the tenor and tone of the reforms. How correct is that impression?

But, Dr Jalan, after having read your newspapers carefully, I see no consensus at all on the reforms. This govt seems to be torn apart by the conflicting views on the reforms. I don't see any consensus. Consensus can only eveolve when the people benefit. How have the people of India benefitted?

How much influence did the World Bank have on Indian fiscal policy during those years? Do you think Dr Singh and Mr Rao would have gone as far as they did without pressure from Preston, Camdessus and Co?

Mr. Jalan, personally do you feel that corruption comes in the way of economic reforms or it is a necessary evil that can live side by side with it.

Mr Jalan: If the output of farmers and their channel to the consumer was to be taken under governmental and other vigilant control, don't you think, that we shall be able to impose at least 1% tax on the farmers and thus bring a uplift in government revenue?

Mr Jalan, communist China began reforms way back in 1978. Why did it take India up to 1991 to initiate reforms (and that too after the horrendous crisis)? did not the bureaucrats, technocrats, et al notice the country's free fall? How come we always lack people with foresight, or is that the system does not allow differing opinions?

Mr. Jalan, personally do you feel that corruption comes in the way of economic reforms or it is a necessary evil that can live side by side with it.

Hullo, Mr Jalan, as an Indian who has lived away from Mother Country for very many years, I wonder how the Indian economy can grow without utilising the resources, talent and wealth of the Indian diaspora. You have lived in this country. You know what we are capable of. The Chinese govt uses the overseas Chinese to promote growth. Why can it not happen with India?

To Archana: The full answers can be found in an earlier book of mine on India's economic crisis, published in 1991 by Oxford University Press, Delhi. The short answer is that it was quite clear by 1987/1988 that we were on a dangerous path. The problem in 1991 became acute, quite suddenly, because of the Gulf war which escalated oil prices and because of political instability at home which reduced our ability to handle the economic consequences of increase in oil prices during the Gulf crisis.

Mr. Jalan, personally do you feel that corruption comes in the way of economic reforms or it is a necessary evil that can live side by side with it.

Mr. Jalan: With all the plans for a prosperous India, shouldn't an average Indian learn to work hard for the plans to materialize? Or is the luxurious western trend blowing currently, a carrot for more effort?

Arthur James: I agree one hundred per cent with you. I believe that there has been a remarkable change in the last 3 or 4 years in our being able to use the tremendous human and financial resources that Indian community commands abroad. We should do much more but I think things are happening .

Come, Dr Jalan, no one is going to buy that argument. Surely, oil prices were not solely responsible for taking us to the ledge of ruin. There must have been something very wrong with the way the finance ministry maintained its ledgers. And speaking of oil prices, our oil bill now seems to be dangerously large. Are we heading towards another crisis in your opinion? Arev we ignoring danger signals for the economy once again? I ask because some bankers in Bombay feel the economy is once again exhibiting signs of collapse and that the finance ministry is once again ignoring it. Do you think we can ever reach the 1991 point again?

Mr. Jalan, personally do you feel that corruption comes in the way of economic reforms or it is a necessary evil that can live side by side with it. ...pssst. archana how old?

Sandeep, old enough to be your grandma.

To Sandeep: I feel that corruption does indeed come in the way of economic growth. It distorts product and other markets, makes the economic process non-trasparent, and inflicts substantial transaction costs.

I agree with Sandeep. How can one of the most venal societies in the world ever hope to thrive? I have some foreign businessmen friends who cannot just do business with Indian government officials and businessmen.

Mr Jalan, what are the three things in your opinion that can prevent the reforms from being a complete success? What are, in your opinion, the danger sings for the Indian economy?

Mr Jalan, infrastructure in India is weak? and the funds are limited? which areas of infrastructure require immediate attention, and what is being done about it?

Thank you Mr.Jalan...I respect your opinion

You still haven't responded to my question on the World Bank. I beg your indulgence and an eloquent response, Sir.

To All of you: Thank you very much for talking to me. It is getting late here and I should be going home. So goodbye for now.

Kandy: You have dragged yourself to quicksand by naming India a "venal society." Infact, India is one of the few nations in the world with a strong culture. Have your foreign bus. friends appraised you of the ignorant you ??

Mr Jalan, please take ten more questions. There are a lot of us from the West who would like to probe your mind. Please, sir

To Arthur James: I came back to try and answer your question on the World Bank. I missed it earlier, and I cannot find it now. Please forgive me. But save it for another day.

from Atul :we have shown willingness to join ASEAN.We have finally acquired MFN status from Pak.We also have been the focus of attention from a lot of foreign companies willing to invest in India.Could you please tell us when would we finally command the respect in the international community that we truly deserve?

Nehru, if you think India is a strong culture, you are crazy! Have you ever done business in India? Ever tried to get your phone fixed? We are a corrupt, decaying, rotten, venal society.

Mr Jalan, I understand you are a busy man and you have had a long day, but please don't leave all of us disappointed. Please

bye bye Mr. Jalan, hope to see you again here sometime.

bye bye Mr. Jalan, hope to see you again here sometime.